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Tag Archive : talent

Hats off Manjit Singh!!!

Amid all the din surrounding the Wizard of Omaha’s endorsement of Paytm’s pole position in the Indian Paymentech space, an endorsement which must be the proudest moment for any entrepreneur, but the day belonged to another Indian. This is the story of an Indian runner who has (reportedly) never won a gold in any national level race. He was considered the rank outsider in the 800m finals of the ongoing Asian Games in Indonesia, in fact, he was the second best Indian in the final. But what happened over the next 2 minutes is going to be remembered for a very long time.

Manjit Singh who hails from Haryana, came from nowhere to win the gold medal for India and pipped India’s best runner, Jinson Johnson to 2nd place. This gave India a very rare 1-2 finish at the Asian games. I could not find a better video of the proud athletes accepting their medals draped in the tricolour but it so rare a moment that even the poor quality video cannot take away its sheen.

Jai ho Manjit Singh & Jinson Johnson!!!

73/2018

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It’s Official, AVF-I is Finally Here!!

After what seems like a lifetime, I am happy to announce that Artha Venture Fund-I (AVF-I) is officially an Alternative Investment Fund (AIF) after SEBI’s grant of the approval. Our team is ecstatic about receiving this news and we are currently working on the final leg of processes, i.e. signing up Limited Partners (LPs) that have made soft commitments to the fund.

AVF-I will invest in pre to early revenue startups, preferably where we are the first investor (in India we would be called the seed investor). We will invest between Rs. 1-1.50 crores in each early-stage investment and participate in the follow-on rounds with larger cheques i.e. 3-4 crores in pre-Series A and 6-9 crores in the Series A round. Therefore, once we invest in a company, they can (provided they perform) expect between Rs. 10-14.50 crores over the course of 3 rounds, from us (an institutional investor). This is a significant USP compared to the other seed funds because we have earmarked a portion of the fund corpus to invest in follow-on rounds.

We made this adjustment because we noticed that when the seed fund doesn’t invest in the Series A round, often, these companies are unable to raise ‘the’ round of capital that separates the men from the boys. So, we did some research on developed startup ecosystems and found that the top-performing seed funds wrote significant, if not larger, follow-on cheques for the Series A round. To further strengthen our hypothesis, we analyzed the MCA records of the Indian unicorns (startups with a valuation of $250 million or more) and also conducted research on the Artha India Ventures’ (AIV) portfolio startups that have raised their Series B rounds. This research concluded that it is possible for Series A investors to make as good a return (on an IRR basis) as the seed & pre-series A investors. This in turn also led to an adjustment in AIV’s investment strategy over the past couple of years (we started writing Series A cheques in our portfolio companies) and the results have been very encouraging, to say the least.

Even in my informal conversations with partners, associates & analysts of later stage investors I have noticed that there is a common lack of confidence in startups that come from seed investors who cannot or aren’t willing to write the cheque (that is significant enough) for the Series A round. The more investors I spoke to the stronger my conviction was that AVF-I had to make this an important USP i.e. getting the confidence of later stage investors in AVF-I’s recommendations for Series A investments, thereby catalyzing the decision-making process for new investors. Most later stage funds that knew our strategy started actively engaging with us on deals in the pipeline and even sending us deals that were too early for them to invest in. I see this as their endorsement of our strategy and look forward to working with the many family offices and later stage funds that are looking for high-quality deal flow.

Besides our investment strategy, we also bring our founders a large network that spans across the globe. Many of these connections are part of to the business relationships our sponsors have (more on them below) as well as the ecosystem created by AIV’s investment in 56 startups (10 of them domiciled outside India). The close connection we maintain with our network will give our investees a leg up in whatever help/access they require along the way.

I want to thank the people that played a part in taking this idea from a mere concept to a final business model:

  1. Yash Kela who came up with the original idea of starting AVF. He is more like a brother than a partner and it is his vision has become my mission. He introduced me to a slew of fund managers, venture partners and single-handedly recruited the entire Advisory board for AVF-I.
  2. Madhusudan (Kela) uncle for devising our unique fund strategy that ensures that the fund team will only make money if we deliver outsized earnings for the fund and of course the investors. I also want to thank him for his personal mentorship every step of the way and the endless support from his family office. Yash and I promise to take AVF to a level that will make all his efforts worth it and make him proud.
  3. My chacha, Ramesh Damani who immediately endorsed his commitment to the fund idea and got me all the help I needed to remove myself from the daily responsibilities at the companies under the Artha Group of Companies. It is well understood what an early endorsement can do for an entrepreneur’s confidence, and I have him to thank for that initial boost of confidence.
  4. My brother, Animesh, and sister Apurva who joined Artha when I needed them the most and took over Artha Energy and Artha India Ventures, respectively.
  5. Sanjay Gandhi, the legal head of Artha Group. If it wasn’t for his persistent follow-ups with our advisors and the SEBI officers, this approval could have taken twice as long. (He must be the most relieved as he won’t have to avoid me when I ask why the approval is taking this long!)
  6. Vinod Keni and the entire AVF team – Dhiral, Nikunj, and Karishma for continuing to believe as things moved slowly and working on building out the entire referral ecosystem which will power our deal flow going forward.
  7. Sandesha for managing what can only be described as the most gruelling job that anyone could ever have i.e. managing my travel & meeting schedule and doing it with an alien-like accuracy.
  8. Last, but not the least my family for being understanding & supporting me throughout the emotional turmoil that a founder of an early stage venture fund goes through.

Going forward, we are in the process of issuing term sheets for 2 very exciting startups and have also made a warehoused investment for a third (will announce it shortly). We expect to achieve our first close in the next 3 months.

Therefore, if you are a startup looking for a well-equipped and experienced investor, reach out to us on prospects@artha.vc.

If you are interested in investing in the fund you can reach out to us on lpprospects@artha.vc

32/2018

How Did You Die

Siri tells me that it took 1,347 days from my first blog post, Dropping Out Of The Rat Race… to my 100th blog post. Thereby, on an average taking 13.5 days to write each blog post. If I remove the 31 blog posts written in 66 days of this year, the average will shoot up to 18.5 days per post, therefore making it evident that things are already looking up for my blog.

In the journey to a 100 blog posts, I have had many interesting & challenging moments. There was a post defending an investee company against a much larger competitor that made it to the Economic Times (without my knowledge). The reaction to this was a screwball approach from their legal advisor who tried to pose as though they were trying to make us their client. That whole experience that was blown out of proportion led to a writer’s block, that made me stop writing for almost 2 months. There have also been times where I wasn’t confidant if what I was writing was meaningful enough for people to read. While reading the Bhagavad Gita over the course of the last 2 years however, I have come to the realization that it isn’t worth stressing over whether people like what I write or not. All I am responsible for, is writing and expressing my thoughts and the way it is perceived isn’t under my control. That lesson (albeit difficult) is something I am starting to imbibe as a motto for all the things that I do in life and hopefully inspire the people around me to pick it up too.

Which is why I think this poem from Edmund Vance Cooke is the best way to express what I have learnt from the journey to 100th blog post, a target that I did not believe I could achieve when I started (my goal was 50).

Now my goal is to just write every week day (my goal is 260 blogs for the year) with no particular number of blogs in mind. The only goal is to write and to keep on writing, come what may cause in the end it is the journey that counts.

How Did you Die

by Edmund Vance Cooke

Did you tackle that trouble that came your way

With a resolute heart and cheerful?

Or hide your face from the light of day

With a craven soul and fearful?

Oh, a trouble’s a ton, or a trouble’s an ounce,

Or a trouble is what you make it,

And it isn’t the fact that you’re hurt that counts,

But only how did you take it? You are beaten to earth?

Well, well, what’s that!

Come up with a smiling face.

It’s nothing against you to fall down flat,

But to lie there–that’s disgrace.

The harder you’re thrown, why the higher you bounce

Be proud of your blackened eye!

It isn’t the fact that you’re licked that counts;

It’s how did you fight–and why?

And though you be done to the death, what then?

If you battled the best you could,

If you played your part in the world of men,

Why, the Critic will call it good.

Death comes with a crawl, or comes with a pounce,

And whether he’s slow or spry,

It isn’t the fact that you’re dead that counts,

But only how did you die?

 31/2018

The Funded Entrepreneurs Group

I just got back from my trip to Kolkata which was planned in order to introduce the founding team of an upcoming investment to Mr. Aditya Ladsaria of Chaibreak (an Artha investee) and Mr. Miftaur Rahman of Wow Momos (a fantastic venture that I deeply respect but unfortunately didn’t get a chance to invest in). The objective of the trip was to give the new founders the chance to learn from two sets of successful founders that had no previous background in food, yet managed to fund their respective successful food startups from customer capital before raising venture capital. I especially admire Aditya & Miftaur’s razor-sharp focus towards addressing the customer’s needs through constant innovation in both, the product and operations.

I was a mute spectator (for the most part) in the conversation between the new founders and the experienced ones, but thoroughly enjoyed listening to their detailed discussions about operations, product innovations, customer loyalty management, HR, etc and all the other topics that concern building a business, except “how to raise money from VCs”. This experience gave legs to an initiative that I have wanted to launch for the last 8-12 months i.e. the Funded Entrepreneurs Group.

The idea is to put a group of founders that have already raised money (seed, angel, pre-series A, series A, etc) into a conference room for a couple of hours every 4-6 weeks to talk about matters that only another founder that has raised money can relate to – ‘how to build the venture!’ The discussion shall take place behind closed doors with no recording so that any founder from any stage of the business growth cycle can ask questions – no gyaan sessions only mutually beneficial universal learning.

I strongly believe that when a founder learns the solution to a problem from a fellow founder who has faced a similar issue and managed to overcome it, the solution seems more do-able and the problem less enigmatic. This will also help form a stronger and more cohesive ecosystem for all entrepreneurs. Going forward, the group can also share business leads or transact with each other and the possibilities remain endless, but for now, lets stick to getting a first meeting done.

Artha helped organise a meeting in an open discussion format for angel investors under the age of 50, with a minimum of 5 investments with a similar objective of learning from each other’s experiences. Those meetings have successfully been going on for the past 11 months with beneficial results for all the participants. Currently, the discussion has graduated to deal sharing and evaluating each other’s investments.

My team and I are excited to be able to organise the first Funded Entrepreneur Group meeting for the founders of our ecosystem. The meetings won’t be sponsored by anyone so that the attendees’ independence will be maintained, but there will be a thorough scrutiny of each person that attends to ensure the sanctity of the event. The exact costs of the event shall be shared between the attendees but I do not expect the cost to exceed 500-1000 per attendee inclusive of tea/coffee and a snack.

So, if you are an entrepreneur who

  1. Has raised outside capital
  2. Are willing to share your experiences to help another founder
  3. Are interested in meeting other founders to build your business

Then email us on feg@artha.ventures with

  1. Your full name
  2. The name of your venture
  3. Link to the article announcing your latest funding round
  4. Your mobile phone number(s)

If there is enough interest, I would love to organise the first FEG meeting in 2-3 weeks (based on everyone’s ability). Email us as soon as possible!

30/2018

Desperation is the Name of the Game

If all things are equal between two candidates that want me to be their mentor, what would be the difference, that would make all the difference? No, it’s not how equity you will give me or how much respect you have for me… The correct answer is – desperation.

I am not referring to the desperation to get time, money or references, but the desperation that burns through the eyes and words of the prospective mentee to succeed. The desperation that cannot be dissuaded by failure, drowned out by rejection or simply because they didn’t get an immediate response from someone they attempted reaching out to for help. I am referring to that desperation that will make a person turn the world upside down to get what they want – yes that desperation.

In a world of unlimited opportunity, this is the kind of desperation I look for, to decide who I should devote my limited time (a precious resource) to. A person must innately want to achieve the skill he is seeking my mentorship for, and not only be attempting to achieve it because he ‘has to’. This distinction leads to a visible difference in the amount of passion and desperation a person exudes.

The lack of this type of desperation and conviction in the importance of achieving that skill doesn’t bode well for my ROTI (Return on Time Invested).

So, if you think I’m being arrogant, standoffish or aloof to your call for help, I am only checking to see if you are as desperate as you are making it out to be.

29/2018

Venture Idea: Putting the Custom in Customer Service

One of my favorite entrepreneurial movies is Rocket Singh Salesman of the Year. The movie has a dialogue that goes, “customer ke toh naam mein hi mer likha hai” (the word customer has mer (pronounced “marr” is the Hindi word for ‘to die’) embedded in it). This single dialogue aptly defines the treatment meted out to the billion Indian consumer customers every single day.

All one has to do is go through the Facebook page of any Indian brand and it will not be hard to find the abundant record of horrific complaints and the apathy awarded by these brands to their customers. Although I have been on a crusade against JetAirways for the ad hoc changes to its Frequent Flyer experience, I have seen very little progress in brands making an effort to improve how they treat their customers. Despite the government’s attempt to provide adequate protection to the consumer by allocating a separate consumer court to resolve consumer grievances and penalize erring brands… the problems are only continuing to mount.

I believe that the next ten years will be the golden age of Indian consumerism. With this thesis in mind, I strongly believe that there is going to be the need for a service that goes beyond allowing a customer to air their grievances but actively taking control to resolve these complaints. For a small fee, this service provider can engage with brands to resolve customer’s problems. If that route doesn’t work they should also be able to prepare the legal documentation required to take the brand to consumer court. They can even go a step further to provide the contact details for competent lawyers who can file & fight these cases. As India marches to 1,000,000,000 online via mobile – the market potential will be massive!

I have been on the wrong side of several bad consumer experiences in India and there used to be a company called myakosha.com that was solving my problem. They played the role of a service provider who resolved these issues directly with Idea, Jet, AMEX and other companies that I was facing issues with. I simply loved their service and the way they made these brands come running to me to solve their errors was an experience worth living through. However, for reasons best known to the MyAkosha team they pivoted to another business model leaving a gaping hole in the ecosystem. Now, I am personally motivated to be that agent of change for the way Indian brands treat their customers. I have a design team ready to develop the front end, know a law firm who can provide the infrastructure & know-how for this service and am willing to fund this project out of AVF.

I am seeking individuals who have a strong background in social media marketing, customer complaint management, and a strong tech background. I am also looking for a person with a strong background in data analytics to build out this venture.

Do you know someone or a team that fits this bill?

Email prospects@artha.vc with a cc to karishma@artha.vc.

25/2018

Fluff Metrics

An interesting phenomenon has been noticed in startup presentations over the past few weeks. Founders have come up with innovative ways of showing large numbers that have nothing to do with what counts as revenues to the startup.

Let me share a few examples with the explanations as provided.

  1. Gross Transactional Value: this the value of the transaction that is taking place because of the service provided by delivering the service. Therefore, a simple example would be that if a truck delivers 5 MT of steel the GTV is the value of the 5 MT of steel which has no correlation to the revenues of the trucking company since that is dependent on the route or no of kms
  2. AUM (Assets Under Management): the value of the videos that have been uploaded to sell to customers. This has no correlation to the revenues as they are made on a pay per click model. How the videos are being valued and by whom – I have honestly no idea
  3. MRP Sold: the sticker prices of the items that were sold. These were very different from actual revenues as there were coupons and discounts that were given. So, if I stick the price tag of a Mercedes on a Maruti the MRP sold would be ginormous but the actual number would be a fraction. These MRP’s are set by me so MRP sold is also in my hands. Do you feel fooled just yet?

Do founders really want to attract investors that are awed by such numbers? Of what use will those investors be who themselves don’t understand that these numbers are useless?

My sincere request to founders is to have the courage to tell me the real numbers. They may not be as awesome as the fluff metrics, but I’ll respect you for your honesty and I’ll work with you until your actual metrics look like the fluff metrics that your peers are showing me.

Just remember this immortal quote attributed to Abraham Lincoln:

359048-Abraham-Lincoln-Quote-You-can-fool-some-of-the-people-all-of-the

24/2018

Beware of This Type of Angel Investor!

Exactly a year ago, I wrote about a growing malaise in the angel investment ecosystem in the post You are NOT an angel investor. It is serendipity that I am writing about sub 5-lakh ($7500) investments from angel investors that are starting to cloud the cap table.

Founders that are raising multiple small cheques from many different angel investors are only shooting themselves in the foot. They should take a moment and ask themselves (and hopefully the investor) why the investors aren’t willing to put in a respectable investment of at least Rs. 5 lakhs?

Do they

  • Lack conviction in the venture?
  • Are hedging their bets by spraying and praying?
  • Are they testing this new investment class?
  • Do they not have the liquidity required to invest more?

If the answer to any of these questions is a “yes”, the founder has reason to be gravely concerned. Investors that lack conviction in your venture are coming along for a ride only if it is smooth, the moment your ship starts swaying in rough waters, they will be the first ones to jump off. The scenario isn’t any better for the spray and pray investor. Both these investor types will create havoc for the founders not only by paying late on the investment but also reneging on their commitments if the company goes through stormy weather. If the cheque size is Rs. 5 lakhs or more, it is still worth getting these passive investors albeit they pay on time. However, to raise a small cheque from an unreliable investor are two variables that can be best avoided.

The investor that doesn’t understand angel investing or doesn’t have to wherewithal to invest a respectable sum of money into your start-up, is only making you the petri dish to understand a new investment class. Why should your venture be that experiment? Why don’t these investors just pay for executive education programmes on angel investing in India or abroad? This will only set them back about the same amount of money that they are willing to invest in your venture. Let them learn investment lessons on their own dime (and time) and not use your bandwidth to do so. In addition, you can avoid the mess that these rookie investors will, later on, create by needling on non-issues or holding up later rounds because they didn’t get the upside that they envisioned.

A second thing that the founder should be wary of is an investor who has a limited net worth and is investing it in a highly risky investment class like startups. What will they do if the investment goes south, like a majority of startup investments do? (it’s the truth, whether we like it or not) Can these small investors gang up and sue you for selling them an investment opportunity that they did not understand? In most western countries, only accredited investors who have the money and understanding of sophisticated investing are allowed to invest in startups. Despite petitioning different government organizations to bring in this type of accreditation, I have seen no action. Why should your startup become the case study to create that accreditation in India?

I have personally been in investments where these small cheque investors were invited with much fanfare. They were responsible for ruining good opportunities for exits, acquisitions and even raising new rounds of finance. The reward you will get from this small investor is just not worth effort. Avoid this investor at all costs.

 18/2018

 

 

 

How I became ShowMeDamani

Many people love my Twitter handle and Blog name, ShowMeDamani. They usually always ask, how it came about. For starters, it was inspired by this iconic scene from one of my favorite movies

This is the detailed backstory to how my nickname became my nickname:

I started my career as a D2D salesman in Texas, a job that is as much about skill as it is about discipline, controlling your mind and asking for help. Since the retention rate of employees was less than 10% after 30 days, it was common to see people quitting or getting let go. There was unspoken respect for each person that survived past a month. This is because everyone knew the tremendous character it required to stick it out for that long. Therefore, it was almost a rite of passage that after a month you got a nickname, and almost always it was one that stuck.

There were two ways that an employee could gain the respect of their peers and the management at the company. The first was to achieve rare sales numbers like 20 sales in a day (Club Venti) or 100 in a week (Century Club); the second, was to deliver a “package”. A “package” was a sales number that you committed for a day, week or month for yourself or your team (if they were a leader). It was a number that was achievable if you pushed yourself and as a competitive unit it was not uncommon for team members to push each other to achieve higher sales numbers. So, if someone promised numbers that were below their caliber, they would be called out for “sandbagging”. However, if someone was unable to deliver their package they were subjected to some form of playful punishment and universal frowning.

I wouldn’t call myself the best salesperson in the company, but I was consistent in delivering the packages that I had promised. At around the same time, UPS was running a famous ad campaign which led to my first nickname – UPS

As I started moving up the ranks of the company from a D2D salesman to a team leader, area leader, and regional leader my boss and mentor taught me one lesson – To make people work twice as hard in front of you as you would expect them to behind your back. His theory was simple, “people do less than 50% of what they are capable of, therefore pushing them beyond their limits in front of you will ensure that they are still doing more than they believe they could when you aren’t around.”

This inspired me to run from office to office, team to team and person to person asking people old and new to “show me” what they were working on, “show me” their sales presentation, “show me” how they would tackle tough customers, “show me” the answers to common customer objections. Therefore, there was a considerable energy every time I visited an office since every person in the office from the salesperson to the person sitting on the front desk was on their toes knowing that I would randomly inspect any one of them. This news reached the ears of the partners of the company.

Around the time of the next promotion, I was called in for a meeting with the partners. As I got the promotion I wanted i.e. the national sales team one of the partners asked me what my nickname was. When I told them it was UPS, someone in the room commented that it could be perceived as a racial slur, a second partner remarked that I should be a new nickname. Almost on cue, the third partner (Bish) asked me what my last name was. When I said “Damani”, he said, “that’s it! You should be Show Me Damani.”

and that is how I became @showmedamani.

15/2018

Investor Speak: A Single Founder vs A Founding Team

This past Saturday, I was at a IIT-Kharagpur as a panelist in their 2018 version of the Global Entrepreneurship Summit. As an early stage investor on a panel that included 2 entrepreneurs and 1 corporate VC the different viewpoints we provided to the same questions was eye-opening. At a point in the discussion the moderator, Flipclass founder, Vineet Dwivedi, asked why Indian VCs prefer founding teams versus single founder start-ups. He shared his own experience of having faced a lot of opposition while raising money. Donning the early stage VC hat, here are some of the reasons I support a team structure versus a single founder.

  1. Indian entrepreneurship ecosystem vs global ecosystem

While the entrepreneurial ecosystem in India is improving by leaps and bounds, it is still difficult to start a business, run a business and even close a business in India. A founding team must manage a lot of core and non-core issues to be able to effectively run their venture. These are challenges that the current Indian educational setup does not prepare them for.

Unlike American universities that offer (don’t play the name game) undergraduate programs in entrepreneurship, preparing young talent for the challenges an entrepreneur may run into – the Indian education system does not have that luxury.

The current Indian education system only prepares talent to enter a specific department (finance, technology, etc) in an organization. It does not provide them with entrepreneurial qualities that are needed to run multiple departments in a single business or even manage delegated HOD’s.

Therefore I get better sleep at night, knowing that I am investing in a team that has the diversity to secure and grow the different facets of  a business versus betting on a single founder that isn’t equipped to deal with all the issues and may be overwhelmed by trying to juggle too many things at the same time.

2. Flexibility required for pivoting

Many of the early ideas lack market validation and are therefore prone to pivot drastically. Therefore, I would rather back a team that has the bandwidth that would permit this quick pivot in case the initial thesis isn’t validated by real data from entering the market.

3. Lack of quality talent

It took me almost two years to find the right CTO for Artha Energy Resources, so I understand the trouble that a startup goes through to find and retain the right kind of talent. As soon as raw talent gains experience and matures, there is dime a dozen established and well-funded companies that are willing to offer tons of money and perks to swindle (I used this word because sometimes the benefits of being with the smaller firm are much larger than a bigger paycheck) it.

I have witnessed co-founders leaving their startup for better opportunities from a competitor after having delivered a fantastic product. So, betting on a single founder increases the risk of my investment. I would rather diversify that risk by investing in a team.

4. Equity hoarding by Founders

It is a unique trait of the Indian entrepreneur to want to hoard all the equity. This alienates key talent that is needed but will not work for anything below the general market salaries that are being offered. The only way to attract this much-needed talent would be to give them generous amounts of equity in the company.

I cannot invest copious amounts of money in the early stages for founders to be able to pay market rate salaries for experienced talent that is required, without accounting for it in larger equity positions (read: Investor math). Instead, I choose to put together a team of people with enough talent to reach the set targets and prevent them from jumping ship by providing an amount of adequate equity while keeping the salary bill affordable.

If a single founder showed maturity in farming out equity to deserving talent, I would prefer working with a single founder with a strong team, rich experience and the incentive to perform.

In a startup ecosystem that is gradually maturing, I am certain that my preference of a founding team over a single founder will be challenged and may even pivot with time. I look forward to facing my theory being stretched, smashed and even replaced.

14/2018